The all-in-one fintech app Revolution To released It is Annual Report for 2021. While 2021 ended over a year ago, this report includes significant numbers, as the company nearly tripled its revenue between 2020 and 2021. Thanks to this explosive growth trajectory , the company achieved profitability for the first time.
Revolut’s financial success starts at the top of the funnel. At the end of 2021, Revolut had more than 16 million customers, an increase of 46% compared to 2020.
Revolut’s main product is an account for sending, holding and receiving money combined with a payment card. While Revolut has yet to obtain a banking license in the UK (its home country), the company now has a full banking license in Lithuania.
He may use this license throughout the European Economic Area by passport rules, which means that Revolut could be considered a bank in Europe. In addition to these basic banking features, the company offers a ton of fintech products – but more on that later.
Let’s look at the big numbers first and convert them to dollars using today’s exchange rate:
- In 2021, Revolut generated $769 million (£636m) revenue vs. $266 million (£220 million) in 2020.
- In 2021, Revolut reported a net profit of $31 million (£26 million) against a net loss of $270 million (£223 million) in 2020.
- Gross margin also jumped from 33% to 70% between 2020 and 2021.
“We achieved our first full year of profit and demonstrated that we can accelerate customer growth, at scale, and increase revenue across all of our product lines,” said Revolut co-founder and CEO Nik. Storonsky, in the press release. “In 2021, we obtained a full banking license from the European Central Bank and welcomed millions of new customers. We also launched several new products and saw more activity from our customers. »
Everything moves up and to the right. In other words, things are going well at Revolut right now. This is why the company managed to raise a $800 million financing round at a valuation of $33 billion in mid-2021.
Generate income from crypto trading and other fees
Revolut’s income comes from several sources. While customers can create an account for free, users must pay fees for certain money management services. Keen customers can also choose to pay for a premium subscription plan to waive some fees and access additional features.
On top of that, Revolut generates revenue through interchange fees. Every time a Revolut user pays for something with a card, merchants have to pay card transaction fees. These fees are split between the merchant’s bank, the card scheme (Visa or Mastercard for example) and the card-issuing bank (Revolut in this case). Although Revolut only receives a tiny fraction of the transaction amount, it can add up when you have millions of customers.
Revenue can be broken down into three main pillars:
- Cards and interchange account for 23% of total revenue ($180m/£149m).
- Subscriptions account for 17% of total revenue ($129m/£107m).
- Foreign exchange and wealth management services account for 55% of total revenue ($421m/£349m).
While the former elements are quite easy to understand, the latter includes quite a few Revolut services. Revolut started out as a seamless exchange app combined with a multi-currency card. Revolut charges at least 0.5% exchange fee above a certain limit for free users. For everyone (including paid users), there are additional fees when you exchange money on weekends or when you exchange an uncommon currency.
Revolut also lets you trade cryptocurrencies, stocks, and commodities like gold and silver. For these financial products, Revolut charges hefty fees — between 1.49% and 1.99% for crypto transactions, between 0.5% and 1.5% for precious metals.
2021 has been a special year with a crypto boom that has led to an increase in crypto transactions as well as renewed retail investor interest in stocks. Remember, 2021 started with the Short press GameStop on WallStreetBets.
Although 2022 may not look as dramatic as 2021, Revolut has already shared a quick look at last year’s numbers. In 2022, the company’s revenue has risen again to over $1bn (£850m). That’s a 30% increase, which is far less than the 189% increase in 2021. And yet many large-scale startups would be quite happy with a 30% increase in revenue. Revolut now has 27 million customers.
Now it’s time to stabilize the company like Revolut failed to release its financial statements on time. If the company wants to go public in the coming years, it will have to improve its internal processes. It would also help when it comes to getting a UK banking license